he onsulA New Publication from the International Affairs Association

of the University of Pennsylvania

T C

Spring 2013· Volume I · Issue 1

INTERNATIONAL AFFAIRS ASSOCIATION2012-2013Director of Publication:

David Schwartz

Editor-in-Chief: Michael Luo

Content Editor: Henry Chang Savar Sareen

Head Layout Editor: Jing Ran

Layout Editor: Amanda Ball Wing Cheung Iana Feliciano Kohei Fujikawa Linda Li Zach Wojtowicz Andrea Yeh Business Staff: Sam Blumenthal

Contributing Columnist: Christine Du Avivah Hotimsky Minsoo Kim Julia Rossi Akshay Subramanian Karl Sjulsen

The Consul

he onsulT CWorld affairs A Look on Indian Infrastructure Page 4

By Akshay Subramanian

Survival of the Richest: Page 6 Saudi’s $109 Billion Quest for Solar Energy

By Karl Sjulsen

Israel’s Next Four Years Page 8

By Avivah Hotimsky

Guatemala: to Arms or to Legalization Page 10

By Wing Cheung

Social reforms An End to Censorship? Page 12

By Chrstine Du

Yes Scotland: A Fighting Chance or Doomed to Fail? Page 14

By Julia Rossi

industry & technology Microsoft, Google and Apple: Tech Wars Page 16

By Jing Ran

A Story of Diamond Page 18

By Minsoo Kim

A few years back, it was an exer-cise in futility to find any article writ-ten on India and its economy that did not feature a generous use of superla-tives. Any skeptics predicting an eco-nomic slowdown were considered to be under an illusion. India, along with Brazil, Russia and China, was univer-sally considered as a member of the pantheon of future economic super-powers. Circumstances, however, have changed over the past year and a half and data seems to validate the hypothesis that India’s economy is losing its sheen. The Indian economy, however, seems to have run into traf-fic and is decelerating at an alarming pace. The GDP grew at 5.3% for the quarter ending in September 2012. While some countries would salivate over a growth rate of over 5%, this happens to be the slowest pace that India’s economy has grown in almost a decade. The industrial output is also far from satisfactory. The problem is also compounded by the fact the government is grappling with a fiscal deficit of 5.8% of GDP and appears to be paralyzed from legislating much needed economic reforms. The pri-mary reason, however, that has been attributed to the downward trajecto-ry of India’s growth rate is the rotten

state of the country’s infrastructure. India’s infrastructure is characterized by congested and potholed roads, trains bursting at the seams, antiquat-ed drainage in big cities and frequent power cuts. To put things in perspec-tive, as of 2010, India had less than 0.07 kilometers of highways per 1000 people and less than 4 kilometers of roads (including paved and unpaved roads) per 1000 people compared to a figure of 21 kilometers of roads in the US. Experts hold the opinion that the current state of India’s infra-structure trims about two percentage points from the annual GDP growth. This article aims to explore the prob-lems associated with India’s fragile infrastructure and the importance of revamping and expanding this life-blood of the economy to bring lift the country’s growth trajectory.

The inadequacies of Asia’s third largest economy’s infrastructure are best reflected in the power sector. The accumulating problems in this creaky sector erupted in the biggest blackout the world had ever seen. In July 2012, more than 600 million peo-ple were affected by the massive pow-er outage that affected most of the northern states of the country. The official reason attributed to the black-out was that some states in northern India withdrew more power from the regional power grid than what was allocated to them. The states were compelled to overdraw from the grid

because of the below average rainfall recorded during the monsoon season had led to drying irrigation pumps in the fields. In reality, the power out-age is only a symptom of underlying issues that have been plaguing the power sector since time immemorial.

A more than significant part of In-dia’s power is generated by coal. Coal India, a state owned monopoly, owns India’s coal mines and has often been blamed for being ineffective in gen-erating enough coal to meet demand. The situation is further deteriorated by the fact that the shoddy road and rail network leads to massive delays in transporting coal from the mines to the power plants. Additionally, mining for coal is often obstructed by environmentalists and Naxalites, militant Maoist groups that operate in central and eastern India. The extent of the shortfall in domestic coal pro-duction is so stark that although India boasts the 5th largest coal reserves in the world, power companies have been forced to resort to importing coal from Indonesia and Australia to feed their power plants. Private pow-er companies have also been forced to purchase coal mines abroad to se-cure a stable source of supply. Many of these power companies that enthu-siastically bid for contracts between 2007 and 2010 when the government announced that it was looking to boost investment in the power sector are unlikely to reap any profits. The

World Affairs

By Akshay Subramanian

A Look on Indian Infrastructure

· 4 ·

firms were eager to invest in the sec-tor since they believed they would be able to acquire cheap coal from Coal India. The deplorable state of finances for players in the power sector also stems from the fact the inability of these firms to transfer the higher costs incurred from importing foreign coal to the consumers. Tariffs on electric-ity are artificially depressed by politi-cians who fear the potential backlash they would receive from voters if they raised electricity prices. To add to the endless list of woes, bureaucracy and red tape, words that are almost inevi-tably associated with the Government of India, contribute the delays in ac-quiring land and starting projects. As a result, private investors are hugely reluctant to invest in the power sec-tor and banks are unwilling to offer financing to the power companies. This is particularly worrying since a study by McKinsey, a consulting firm, estimated that the modernization of India’s power transmission sector alone requires investment to the tune of almost $110 billion.

The downward spiral the power sector finds itself in is only the tip of the iceberg. At present, India’s roads and railways are alarmingly ill-equipped to handle the rapid and unplanned ur-banization of the country. The endless lines of traffic that clog the narrow and congested roadways of India’s metropolises and the overcrowded trains offer a prime exhibition of the deficiency at hand. As the spending power of India’s middle class contin-ues to grow, the rate of migration to the cities is only going to increase. The burgeoning middle class also im-plies a higher number of cars on the country’s roads. Though India boasts one of the largest road networks in the world, the roads are rather poorly

maintained and more than 50% of the roads are unpaved. It is evident that the pace at which new projects are be-ing implemented is far too slow to ease the ever-rising pressure that is being exerted on India’s road and rail net-work by its gargantuan population. To place things in perspective, Manhattan, which has a population of fewer than 2 million people, has 16 bridges, 4 under-water tunnels along with a ferry system which link the island to the mainland. In contrast, Mumbai, India’s most popu-lous city with a population of over 18 million people has just 6 bridges. Af-ter decades of planning and reports by numerous committees, the only symbol of modernity that can be accredited to Mumbai’s roads is the Rajiv Gandhi Sea Link, 4.7 kilometer cable-stayed bridge. The poor quality of infrastructure is also one of the contributors to a stub-bornly high rate of food inflation in the world’s second most populous nation. The deficient road and rail network coupled with poor and inadequate food storage facilities lead to wastage of mil-lions of tons of food grains every year. This figure is particularly stark consid-ering that a sizeable part of the coun-try’s population lives below the poverty line.

While there is unanimous agreement among all parties involved that there

is an urgent need to modernize the country’s roads, railways, and power transmission sector, the lack of politi-cal will to expedite this process in ad-dition to corruption, which is deeply ingrained in India’s political fabric, have proved to be major impediments in implementing infrastructure related projects. For instance, the government has been hugely reluctant to privatize the coal sector. The government hopes that a whopping $1 trillion will be spent on infrastructure between 2012 and 2017 but considering the government’s track record, it would take a brave soul to accept these words at face value. It would, however, be unfair to say that the government has been entirely inac-tive. The government recently formed the Cabinet Committee on Investment (CCI), headed by the Prime Minister, to fast-track the clearance of infrastruc-ture projects in excess of $200 million to avoid the bureaucratic delays that plagues the approval of nearly all proj-ects. The CCI will also help simplify rules and procedures followed by cer-tain ministries such as the Ministry of Environment and Forests. The story of India’s infrastructure is not all doom and gloom. There are certainly success stories that have ensued from partner-ships between the public and private sector such as the modernization of the international airport in New Delhi, the metro systems in Bangalore and New Delhi, the Rajiv Gandhi Sea Link in Mumbai, and the 165 kilometer Taj Ex-pressway in northern India. These suc-cesses, however, have been few and far between. Experts believe that India will need to invest almost 10% of its GDP or nearly $100 billion in infrastructure each year to maintain a GDP growth rate of over 8% - India most certainly has a long way to go before 8% growth becomes a reality again.C

Kala, Anant Vijay. India July-September GDP Grows 5.3%. 1 December 2012. January 2013 <http://online.wsj.com/article/SB10001424127887323751104578150260389548782.html>. Wikipedia. Indian Road Network. <http://en.wikipedia.org/wiki/Indian_road_network>. Guha, Romit. India Is Focusing on Growth. 12 November 2012. January 2013 <http://online.wsj.com/article/SB10001424127887323894704578112302410592038.html>. The Economist. An Area of Darkness. 4 August 2012. January 2013 <http://www.economist.com/node/21559977>. The Economist. The future is black. 21 January 2012. January 2013 <http://www.economist.com/node/21543138>. The Economist. An Area of Darkness. 4 August 2012. January 2013 <http://www.economist.com/node/21559977>. Mckinsey & Company. "Powering India: The Road to 2017." Executive Summary. n.d. The World Bank. Roads, paved (% of total roads). <http://data.worldbank.org/indicator/IS.ROD.PAVE.ZS>. The Economist. Halfway to paradise. 22 December 2012. January 2013 <http://www.economist.com/news/christmas-specials/21568582-half-built-bridge-symbol-ises-urgency-and-frustrations-improving-indias>. NDTV Profit. Cabinet Committee on Investments to review procedures followed in grant of clearances. 8 January 2013. January 2013 <http://profit.ndtv.com/news/corporates/article-cabinet-committee-on-investments-to-review-procedures-followed-in-grant-of-clearances-315830>. The Economist. The Half-finished Revolution. 21 July 2011. January 2013 <http://www.economist.com/node/18986387>.

Saudi Arabia, the world’s largest oil producer and exporter, recently revealed its intention to make the world’s single largest investment in solar power to date. The oil-rich monarchy plans to invest $109 bil-lion in solar energy, just shy of the 2011 global aggregate of $136 bil-lion. Its renewable energy program, spearheaded by the King Abdullah City for Atomic and Renewable En-ergy (Ka-Care), will receive the bulk of the money over the next two de-cades. The vice-president of Ka-Care, Khalid Al-Suliman, hopes that nuclear and renewable energy together will supply half of the country’s electricity needs by 2032. Coupled with Saudi Aramco’s new oil exploration initia-tives, the turn towards solar energy would allow Saudi Arabia to maintain its position as the world’s leading oil exporter. So while Ka-Care’s expecta-tions are ambitious, if met, they may ensure the stability of the Saudi re-gime, as it exists today, well into the 21st century.

According to Bloomberg News En-ergy Finance, Saudi solar energy cur-rently supplies a mere 3 megawatts, equivalent to less than one percent

of Saudi electricity demands. The in-vestment plan calls for the construc-tion of enough solar plants to supply 41,000 megawatts by 2032; enough to meet one-third of the country’s energy needs. The first new plant, scheduled to open in 2015, is set to be built in Mecca and will provide around 100 megawatts of electricity. While the number of plants alone is impressive, Ka-Care has demonstrat-

ed that Saudi Arabia is ideal for solar energy. In fact, the King Fahd Univer-sity of Petroleum & Minerals in Dhah-ran estimated that Saudi Arabia has 4.5 to 7 solar kilowatts per square meter per day, more than twice of that anywhere in Europe. The Saudi solar project, if well executed, would drastically reduce Saudi’s domestic oil consumption, allowing the gov-

ernment to sustain record oil ex-ports.

Furthermore, the Saudi govern-ment plans to invest as much as $100 billion in nuclear energy to supple-ment the $109 billion investment in solar energy. The plan would see the construction of 16 nuclear reac-tors by 2030 with a total capacity of 14,000 megawatts of electricity. In the past two years, the Saudi govern-ment has demonstrated its commit-ment to nuclear energy by signing nuclear accords with France, South Korea, Argentina, and most recently, China. Moreover, Aramco believes the country could reap a further 25,000 megawatts from wind and geother-mal energy. All said and done, renew-able energy would supply slightly more than half of Saudi electricity de-mands by 2032. While renewable en-ergy is economically valuable in and of itself, it becomes strategically and politically valuable within the frame-work of oil.

The solar investment and subse-quent diversification of Saudi energy resources, would allow the gulf state to maintain its position as the world’s leading oil exporter, even as we ap-proach global peak oil. Saudi Aramco has revealed that Saudi Arabia has 259.7 billion barrels worth of oil re-serves, roughly one-fifth of the world

World Affairs

By Karl Sjulsen

Survival of the RichestSaudi’s $109 Billion Quest for Solar Energy

· 6 ·

“The Saudi solar project, if well executed, would drastically reduce Sau-di’s domestic oil con-sumption, allowing the government to sustain record oil exports.”

Photo by Martin Prochnik

· 7 ·

total. Moreover, they project that Saudi potentially has an additional 650 bil-lion barrels of undiscovered reserves. In fact, Aramco has already pledged $35 billion towards future exploration initiatives. Even in light of its large reserves and commitment to explora-tion, Saudi Arabia could become a net importer of oil by 2030 due to rising domestic energy demands according to Citigroup. The country currently consumes around 850 million bar-rels a year for its own energy needs, a figure that could rise by as much as 8% a year. But Ka-Care’s renewable energy initiative could reverse that verdict. The plan would allow Saudi to cut domestic oil consumption in half, ensuring that the country could con-tinue to export oil well past 2030. Fur-thermore, a diversification of energy resources reduces Saudi exposure to global market price shocks. It may even allow the Gulf state single-hand-edly influence global oil prices again, something it has been unable to do since the 1980s. Ultimately, Saudi’s dedicated pivot towards renewable energy guarantees them a steady, if not increasing, stream of income over the next century. And for the Saudi re-gime, income translates directly into legitimacy.

The legitimacy of the Saudi monar-

chy is nearly entirely dependent on its large and steady annual income, 86% of which is composed solely of oil exports. The monarchy, while unrestrained and unaccountable, has worked to foster material gains for its population. By en-suring a stable business environment, the government has attracted vast amounts of foreign direct investment (FDI). In 2010, Saudi broke into the top ten most attractive nations for FDI with net inflows of $36 billion. But while the

regime may have driven economic de-velopment, it has also consistently (and successfully) restricted political devel-opment. In fact, the monarchy has fairly explicitly “bought” the support and ap-proval of its own people. Simeon Kerr of the Financial Times, notes that dur-ing the Arab Spring, “Riyadh paid out a two-month salary bonus to govern-

ment employees…while also raising the minimum public-sector wage and hir-ing an extra 60,000 staff for the interior ministry.” To further pacify the Saudi populous in late 2011 and throughout 2012, the government funded the con-struction of 50,000 homes as well as a new railway connecting Mecca and Me-dina. Saudi’s overflowing coffers (Saudi currently holds the world’s 4th largest FOREX reserves) have functioned as the royal family’s most salient basis of ruling legitimacy and will continue to do so in the future.

While the Saudi quest for solar ener-gy is an intrinsically economic decision, at its core it is driven by a much more potent force: political survival. The Saudi regime as it exists today is effec-tively a dictatorship, benevolent though it may be. Not only is the government unrestrained and unaccountable, but it also refuses its own people a plethora of basic civil rights, all in exchange for capital-driven economic growth. And as long as the regime can afford to buy legitimacy, it will continue to do so. Ka-Care’s proposed renewable energy revolution would not only stimulate Saudi’s domestic economy, but would also fundamentally guarantee the rule of the Saudi monarchy for the foresee-able future. C

The Consul

“The legitimacy of the Saudi monarchy is nearly entirely dependent on its large and steady annual income, 86% of which is composed solely of oil ex-ports.”

Core area of Saudi Aramco in DhahranPhoto by Eagleamn

http://www.bloomberg.com/news/2012-09-23/mecca-seeks-to-lead-saudi-arabia-s-solar-energy-expansion.html http://www.bloomberg.com/news/2012-05-10/saudi-arabia-plans-109-billion-boost-for-solar-power.html Ibid. http://www.saudigazette.com.sa/index.cfm?method=home.regcon&contentid=20121028140999 http://www.bloomberg.com/news/2012-09-04/saudi-arabia-may-become-oil-importer-by-2030-citigroup-says-1-.html http://www.asiantribune.com/news/2010/07/24/saudi-arabia-breaks-top-10-fdi http://www.ft.com/intl/cms/s/0/582e70d2-30a5-11e1-b96f-00144feabdc0.html#axzz2HW7ePZnT

On January 22, Israelis will head to the polls to decide who represents them in the Knesset and whether Benjamin Netanyahu will have four more years as prime minister. Al-though these elections were original-ly scheduled for October, a disagree-ment in budgetary issues within the government led Netanyahu to call an early election.

Israeli elections are based on a sys-tem of proportional representation. Thus, when voters go to the polls, they will vote for a party, not a person. As a result, a government will form where each party is given its respec-tive number of seats, a number rep-resentative of the percentage of the vote it receives. To form the coalition government, the president chooses a Knesset member, typically a leader of the party, to form the coalition. The member must then negotiate and win a vote of confidence from the Knesset. This member will then become prime minister of Israel.

Throughout the race, Benjamin

Netanyahu has held a steady lead, and he will likely remain prime min-ister for four more years. Focusing on security issues, Netanyahu has continuously argued that his reelec-tion is imperative for Israeli security, especially following the late 2012 Gaza Strip conflict and the increased nuclear threat from Iran. Following

a relatively quiet election season, though, Netanyahu has recently had difficulties with President Obama after Obama was secretly recorded discussing Netanyahu’s performance as prime minister. He argued that Ne-tanyahu has not been the best leader for Israel and that he does not have Israel’s best interests in mind. How-ever, even with this criticism, Netan-yahu still has strong report from Is-raelis throughout the country.

Although the prime minister spot has a clear predicted winner, the rest of the election is more competitive. With many voters still undecided, pollsters are less confident about the predicted results; however, it is likely that Netanyahu’s Likud-Beiteinu Par-ty will likely win the most seats in the election and will have twice as many seats as its main competitor, the La-bour Party, which should be followed by the Jewish Home Party.

Depending on the results of the election, Israel may see one of many different situations in the next few years. Thus, the results may give Is-rael a glimpse of what the next four years will look like. If Netanyahu and his Likud Party do win, security will be stressed as the main concern, and there may be an escalated conflict fol-lowing recent heightened tensions with the Palestinians. Netanyahu has recently stated that Jewish settle-ments in the West Bank will not be re-moved during his next term, angering many Palestinians and opponents of settlements. Additionally, Netanyahu has recently announced that homes will be built on land that Palestin-

World Affairs

By Avivah Hotimsky

Israel’s Next Four

Years

· 8 ·

“Netanyahu has recently had difficulties with Presi-dent Obama after Obama was secretly recorded dis-cussing Netanyahu’s per-formance as prime minis-ter. ”

· 9 ·

ians have claimed for a potential future state. Much of Netanyahu’s criticism during the first term arose from Jewish settlements; thus, this could be a prob-lem in the second term.

If Netanyahu and the Likud Party do win this election, there must be a focus on the economy. Throughout his tenure, Netanyahu has kept a relatively stable economy in Israel when com-pared to the rest of the world. However, even though Israel has more stable sta-tistics than some of its Western coun-terparts, its growing deficit has been a concern for many citizens. Therefore, if Netanyahu is elected again, there will be a strong pressure for him to focus

on the economy.

Although Netanyahu’s reelection may cause heightened tensions with the Pal-estinians, his reelection, and the election of a Likud led government, could also be very beneficial for Israeli security as a whole. Netanyahu has continuously been lauded as someone who knows Israel’s security needs and as someone who will always fight to keep Israel safe. He makes his positions clear, especially in impor-tant issues such as Iran. Throughout his tenure as prime minister, Netanyahu saw an escalated conflict with Iran and the Iranian nuclear program, and his strong opposition to any Iranian nuclear weap-on has allowed Israel to gain support from the West. Thus, with Iran becoming a larger threat to Israel, it may be impor-tant for Netanyahu and his party to stay in office, for a transition in power could lead to a security weakness that could be exploited by other nations.

In a just short period of time, Israel’s future leaders will be decided, and with these leaders, Israel will get a preview of what the next four years will look like.

C

The Consul

“With many voters still undecided, pollsters are less confident about the predicted results”

“[W]ith Iran becoming a larger threat to Israel, it may be important for Netanyahu and his party to stay in of-fice, for a transition in power could lead to a security weak-ness that could be exploited by other nations.”

Francois Zimeray and Benjamin Netanyahu,

source: < http://upload.wikimedia.org/wikipedia/commons/8/87/Netanyahu.jpg?

On January 14, 2013, gunmen murdered the mayor of the Guatema-lan city Jutiapa, Carlos Castillo Medra-no, in a barbershop. The violent death of Mayor Medrano has cast doubt on the accomplishments proclaimed by President Otto Perez Molina regard-ing the reduction of violence across the country.

Last winter, President Molina as-sumed office and declared his in-tention to crack down on violence spawned by the illicit drug trade in Latin America. However, a year later, reports of abuse at the hands of Gua-temalan military personnel and drug-related violence continue to surface.

President Molina has attributed the ongoing violence in Guatemala to not only issues within the military, but also to the demand created by a high level of drug use in the U.S. and the alleged spillover of violence from the activities of the drug traffick-ing organizations (DTOs) in Mexico. DTOs are networks of individuals in-volved in the creation and trade of il-licit drugs. These organizations often operate at the transnational scale and

involve advanced technological in-novations ranging from airplanes to submarines.

Above: Photograph of cocaine discov-ered in a submarine found by the Coast Guard.

President Molina has called for a stronger domestic military response as well as better containment of the influence of the Mexican DTOs and the reduction of the demand for illicit drugs in the U.S. In addition, Presi-dent Molina has also proposed the legalization of illicit drugs as a way to thwart the growth of the illicit drug trade.

The murder of Mayor Medrano is an enormous setback to the coun-ter-narcotics initiatives proposed by President Molina. The continuation

of violence in Guatemala has sug-gested to the U.S. that the govern-ment is still overwhelmed by criminal activity and that rule of law remains weak. The U.S. has also been reluctant to provide military aid to the Guate-malan military because of the many reports of abuses committed by Gua-temalan military personnel. Instead, in August of 2012, the U.S. led a joint

military operation consisting of 200 U.S. Marines, and military and law en-forcement personnel from 13 other countries. The deployment of U.S.-led forces in Guatemala has been deemed the largest in the past few decades, which reveals how concerned the U.S. government is with the development of illicit drug activities in the region.

World Affairs

By Wing Cheung

Guatemala: To Arms or

to Legalization

· 10 ·

DTOs are networks of in-dividuals involved in the creation and trade of illicit drugs. These organizations often operate at the transna-tional scale and involve ad-vanced technological innova-tions ranging from airplanes to submarines.

· 11 ·

More importantly, the operation in-dicates that the U.S. government has deemed the national response initi-ated by the Guatemalan government to be insufficient and a multilateral intervention necessary to stop the violence in the country. It is unlikely that the Guatemalan military will re-

ceive any logistical support from the U.S. until its international reputation improves.

The dismissal of the law enforce-ment response to the drug violence in Guatemala could also deter the U.S. from fully supporting President Moli-na. The U.S. has historically advocated the use of law enforcement agencies to respond to domestic illicit drug ac-tivity. President Molina, however, has been a strong supporter of more ag-

gressive military operations led by the Guatemalan military.

The proposal of the legalization of illicit drugs is also equally unlikely to be realized. Even though the legaliza-tion of marijuana has been a growing movement, even in some states in the U.S., the legalization of substances like cocaine and heroin remains highly un-likely due to the high degree of health Above: Photograph of illicit drugs dis-covered in a frigate.

risks posed by the use of such danger-ous narcotics.

In addition, as a result of the in-

creasingly sophisticated means of technological and tactical innovations and the continuation of the vibrancy of the illicit drug trade, Mexican DTOs will most definitely continue to expand their operations. The reduction of the violence committed by the Mexican DTOs would require not only effective

regulation of the drug trade but also

fundamental social change, especially in the way that people perceive illicit drugs and problems of the illicit drug trade.

In fact, the requests made by Presi-dent Molina all reflect the complexity of the multifaceted nature of the illicit drug trade. Political, social and econom-ic differences within the international community have thwarted President Molina and his administration in their efforts to combat the drug-related vio-lence in Guatemala in the fashion that they see fit. At the same time, President Molina and the rest of Guatemala can-not escape the impact of such differenc-es as a result of the increasingly global-ized international community.

As the role of non-state actors be-come more influential in international relations and the old geopolitical order breaks down as the world becomes in-creasingly multipolar, Guatemala must act quickly to contain and reduce the drug-related violence within its borders without further reliance on U.S. support for Guatemalan military personnel. C

The Consul

President Molina has called for a stronger domestic mili-tary response as well as better containment of the influence of the Mexican DTOs and the reduction of the demand for illicit drugs in the U.S.

...in August of 2012, the U.S. led a joint military operation consisting of 200 U.S. Marines, and military and law enforce-ment personnel from 13 other countries. The deployment of U.S.-led forces in Guatemala has been deemed the largest in the past few decades, which re-veals how concerned the U.S. is with the development of illicit activities.

Above: An illustration of drug trafficking routes by air and by sea.

Above: A photograph of drugs seized from a frig-ate.

“Dream for China, dream for free-dom, dream for constitutionalism.” These were the words that were sup-posed appear on the new year’s issue of Southern Weekly, Canton based Chinese newspaper well known for its bold outspokenness. These would have been the words to appear in the newspaper, had its editor in chief been the one to decide. This was not the case for Southern Weekly. On De-cember 23, 2012, Southern Weekly writer Can Huang submitted the new year’s special edition front page edi-torial titled “Dream for China, Dream for Constitutionalism.” The text was then passed on to the provincial Pro-paganda Department for review. The bureau sent back edits two days later. The paper’s editing team spent the following week editing the article, cutting out most parts addressing constitutionalism. A final version was sent to the Propaganda Department on January 1, 2013, after which the paper’s editorial staff returned home for the holiday.

On January 3, the day the paper was published, keen readers noted

rookie mistakes in the paper’s front-page editorial, now titled “Chasing the Dream.” These included mistak-en dates as well as ill use of gram-mar and poor syntax. People posted their observations on Weibo, China’s leading social networking website (equivalent to Twitter). The news quickly circulated among readers

and internet-users, whose initial re-action was to mock the paper for its unprofessionalism making such basic mistakes. The editors of the paper, understandably infuriated by these allegations, revealed also via Weibo that these mistakes are actually ac-countable to the provincial Propa-ganda Department leader’s personal alterations. The editors also took the opportunity to voice their discontent with China’s censorship policies. The

incident caught on like wildfire, and soon developed into a widespread outcry on the social media platform calling for freedom of speech in the media industry. Hundreds upon thou-sands of people “tweeted” about the incident within the first day after the paper was published. Events escalat-ed quickly, and on January 7 a group of activists gathered outside South-ern Weekly’s Canton headquarters to voice their support for the paper’s editors, who had gone on strike, and to protest government censorship.

The Southern Weekly is long known to be relatively outspoken and liberal compared to other Chi-nese newspapers. Though hailed by liberal intellectuals both domestic and abroad as China’s most influ-ential liberal newspaper, Southern Weekly has long suffered a rocky re-lationship with its unyielding patron, the Chinese government. As early as 2001, three of the newspaper’s edito-rial board members were reportedly sacked for publishing a discussion with LiaoYiwu, author of The Corpse Walker: Real Life Stories: China From the Bottom Up, which was and still is banned in China. In the following year, Southern Weekly reporter Fang Jingyu was fired for writing an expose

Social Reforms

By Christine Du

An End to Censorship?

· 12 ·

“The incident caught on like wildfire, and soon de-veloped into a widespread outcry on the social media platform for freedom of speech.”

· 13 ·

on a Project Hope (a charity organiza-tion with operations in China) leader who embezzled substantial public funds. The government continued to press down hard on the newspaper, including its 2009 interview of Presi-dent Obama, which was allegedly censored for supposedly controver-sial discussion of topics such as hu-man rights and freedom of speech. It would come to no surprise then that Southern Weekly’s new year’s edito-rial “Dream for China, Dream for Con-stitutionalism,” did not pass the gov-ernment’s screening.

The protest posed a test for Xi Jin-ping, the newly installed Communist Party chief and represents a serious dilemma for the Communist Party during a new age of social media and micro-blogging. Western news sourc-es have reported that this incident is indicative of growing dissent among the Chinese regarding government censorship. The London-based Econ-omist even went so far as to saying that without reforms, public dissatis-faction would reach a “critical point”

and the country would “fall into the turmoil and chaos of violent revolu-tion.” This notion that these protests will lead to a wide scale movement for free speech is unfounded and rather farfetched. Frankly, media censorship of newspaper is not news to the China media industry, which is ostensibly entirely government-controlled and regulated. The dissent from Southern Weekly’s editors was sparked not by the fact that their news article was subject to censorship (it has been from its very first issue), but by the fact that the censored version of the text was of poor quality and tainted the paper’s reputation amongst read-ers. In fact, the content of the article was changed already during the first round of review, a process that did not raise any discontent. This lack of out-ward dissent reflects the vast majority Chinese media personnel, who are ac-customed to government censorship. None of the main activists behind

the protests online petitions for free speech represent actual news agencies. Even though there has been numerous petitions and talk circulating on the In-ternet, mainly via Weibo (China’s larg-est social media network), it remains unlikely that these voices will gather enough momentum to become a fully-fledged revolution.

In fact, one of the main factors inhib-iting the escalation of these anti-cen-sorship demonstrations is the fact that much of it is contained within a social media platform, which is in itself sub-ject to government censorship. Days after Southern Weekly posted a letter criticizing the government official who

allegedly edited the article, the paper’s official Weibo account was frozen. The search terms for Southern Weekly were also blocked for a few days after the incident. Clearly, a fight against cen-sorship taking place on the Internet is doomed for failure, since the Internet

as a communication medium is itself often censored. Furthermore, the social environment of the country makes it difficult for this cause against censor-ship to gather enough momentum. Most of the protesters against government censorship had been intellectuals and university students, which do not in fact represent the majority of the Chinese population. Immediately following the initial protests, counter-protests took place, protesting the protesters. This is indicative of the discrepancy among the people of China that prevents collec-tive action. Coupled with the obstacles to unity through social media, the scat-tered nature of free-speech advocates prevents substantive action.

Nevertheless, the Chinese govern-ment has taken swift action in resolving this conflict, sending a leading official to negotiate a settlement with the strik-ing editors. It seems that the incident will come to a peaceful end. However, it does suggest a need for the Chinese government to make reforms to sat-isfy its emerging young generation of aware, educated people. The Southern Weekly protests may be suppressible, but the issues contingent to the event cannot be ignored. For the sake of sta-bility and progress, Chinese leaders will need to start making changes. C

The Consul

“It remains unlikely that these voices will gather enough momentum to become a full-fledged revolution.’”

“The social environment of the country makes it difficult for this cause against censorship to gather enough momen-tum. ”

After more than three centuries of debate, the movement for an in-dependent Scotland is on the rise. Scotland’s current first minister, Alex Salmond, recently negotiated a referendum on the question of inde-pendence with the UK government, marking the commencement of an intense campaign to convince the Scottish people to vote for national independence. At the moment, the referendum is projected to take place in fall of 2014. But will the people of Scotland follow Salmond’s lead and support independence? And if they do, what does independence mean for the future of Scotland and its place in the European Union?

History of the Movement The Scottish independence move-

ment can arguably be traced back to the signing of the Act of Union in 1707, which officially tied Scotland to England. Though many believed unification was necessary to prevent Scotland’s impending financial ruin, opposition to the Act of Union was strong at the time. Still, for the next two hundred years, in which the Brit-ish Empire was at its peak, notions of Scottish independence were not seri-ously considered.

All of this changed with the found-

ing of the Scottish National Party in 1934. The formation of the SNP—which, notably, coincides with the decline of the British Empire—is a formal reflection of the shift toward nationalist attitudes that has been building ever since. In 2007, the SNP gained a minority presence, and in 2011 it became Scotland’s majority party. But does Scottish support for the SNP necessarily equate support for independence? After all, although Salmond has always been a vocal na-tionalist, the Scottish people were highly aware that he could not de-clare Scottish independence without the peoples’ support when they elect-ed him. Indeed, despite Salmond’s popularity, recent polls suggest that if the referendum were held tomorrow, only about one-third of the popula-tion would vote “yes” for Scotland’s separation from the UK.

The Yes Scotland CampaignSalmond’s Yes Scotland campaign

officially began in May 2012. The goal of the campaign is to garner one mil-lion signatures for an independent Scotland prior to the 2014 referen-dum, which would effectively ensure its success. Numerous celebrities have since endorsed Yes Scotland, in-cluding actor Sean Connery and nov-elist Irvine Welsh.

But many disparage Salmond’s goals as implausible; after all, when the Yes Scotland campaign began,

polls pointed to the consistent un-popularity of independence. Still, although support for independence hovers around a mere 30% of the population, deeper analysis of this number reveals just how flexible the Scottish people are regarding their nationalism. A YouGov poll found that 45% of people said they would vote “yes” if they believed it would benefit them financially, and 65% said they

would vote for independence if it guaranteed them an additional £500 per year. This data exposes just how closely the Scottish people’s percep-tion of independence is tied to its eco-nomic concerns; clearly, in order to run a successful campaign, Salmond must appeal to the people’s wallets. This may prove a difficult case to make, for in separating from the UK, Scotland also relinquishes its claim to the already fragile economic security that UK membership offers. These

Social Reforms

By Julia Rossi

Yes Scotland: A Fighting Chance or Doomed to Fail?

· 14 ·

“Despite Salmond’s popu-larity, recent polls suggest that if the referrendum were held tomorrow, onl about one-third of the population would vote ‘yes’ for Scotland’s sepa-ration from the UK.”

concerns have been compounded by Salmond’s intimations that he would prefer to break away from the pound as Scotland’s currency and convert to the precarious Euro.

Perhaps in an attempt to draw at-tention away from economic concerns and toward patriotic impulses, Sal-mond’s political rhetoric has grown increasingly aggressive in recent months. His comments in October took on their most brazen tone yet: “Why on earth do we allow this in-competent bunch of Lord Snooties to be in positions of authority over our country?” Salmond challenged. “West-minster would put this first-class na-tion in the second-class carriages.”

The ReferendumAlthough the SNP currently occu-

pies a majority in Scotland, its leaders agree that independence requires a direct vote from the Scottish people, and will therefore not declare inde-pendence without holding the refer-endum. Moreover, all negotiations on the referendum have been and will continue to be arranged through the UK government, in accordance with Scotland’s current status as a part of the UK.

The Edinburgh Agreement—a formal document negotiated by the UK and Scottish governments that outlines the parameters of the refer-endum—was signed on October 15, 2012. The signatories were Prime Minister David Cameron, First Min-ister of Scotland Alex Salmond, Sec-retary of State for Scotland Michael Moore, and Deputy First Minister of Scotland Nicola Sturgeon. The agree-ment declares that the Scottish gov-ernment will legislate the referendum, and that it will adhere to “the highest standards of fairness, transparency, and propriety, informed by consulta-tion and independent expert advice.”

With the “highest standard of fair-ness” in mind, Salmond has pushed to include Scottish 16 and 17-year-olds in the vote, considering the enormous

impact that the referendum could hold for their futures. The rest of the voters will include Scottish-born people who reside in Scotland, as well as citizens of other parts of the UK who now live in Scotland.

Voters will be asked a simple ques-tion along the lines of “Do you think Scotland should be an independent na-tion?” There has been talk of a “second question” that asks voters if they would support increased autonomy for Scot-land, rather than total separation from the UK. However, it is unlikely that the second question will be asked; Salmond

believes that it would dilute the re-

sults of referendum, while Westminster worries that the Scots are more likely to pass a referendum for increased au-tonomy than one for full independence.

What’s Next?At this point, it is too early to predict

the outcome of the referendum with certainty. If Yes Scotland fails to per-suade voters that independence will benefit them financially, the campaign will likely fail, resulting in a continua-tion of the status quo.

But what if the independence move-ment succeeds? In this case, Scotland would be required to re-apply for mem-bership in the European Union—a com-plicated process that could deter resi-dents from voting for independence. Moreover, the original members of the EU retain the power of veto for admis-sion into the union, and some speculate that Scotland’s application would meet a surprising force of opposition—Spain. Because Spain is currently trying to suppress the stirrings for independence in Catalonia, it is very possible that the Spanish would reject Scotland’s appli-cation to signify the consequences of independence. C

The

“Why on earth do we allow this incompetent bunch of Lord Snooties to be in po-sitions of authority over our country? Westminster would put this first-class nation in the second-class carriages” -Alex Salmond

Pipes and Drums corps of the 1st Battalion Scots Guard

http://www.bbc.co.uk/news/uk-scotland-scotland-politics-18364699 Ibid http://www.huffingtonpost.co.uk/andrew-smith/scottish-independence-alex-salmond_b_2013038.html http://www.bbc.co.uk/news/uk-scotland-scotland-politics-20010209 http://www.bbc.co.uk/news/uk-scotland-scotland-politics-19942638 http://www.bbc.co.uk/news/uk-scotland-scotland-politics-18364699 Ibid http://www.huffingtonpost.co.uk/2012/12/06/scottish-independence-eu-accession-veto-spain_n_2249473.html

Industry & Industry

By Jing Ran

· 16 ·

The story began in 1998, the year in which Mi-crosoft first released its Windows98 system, Apple first introduced its iMac, and Google was founded by two Stanford students. Since then, along with the world-changing development of the internet and high technology, the three companies have entered into a series of battles, struggling for control over different digital areas. Though the mastery of light sabers is not required, the wars in the tech industry today are featuring equal intensity and uncertainty as those a long time ago in a galaxy far, far away, with technology and business strategy as their weapons.

The Phone Menace As smartphones change the way people find informa-tion, consume content and purchase apps, they have become the most coveted de-vices and the fastest growing

market. In 2011, 487.7 million smartphones being sold, more than the number of PCs and tablets combined . With distin-guished operating system, the competition over market share can be divided among iPhone, Android and Windows phone, becoming the battle front of the three companies. Simple and consistent since 2007, iPhone’s seamless integration with other Apple devices in transferring data makes it easy for customers to understand. The abundance of iPhone apps market also provides users with more choices. Microsoft, on the other hand, is catching up with its advantage of own-ing both the smartphone oper-ating system and the dominant PC operating system. Mean-while for Google, its Android system has found its strength as an open-source operating system that any manufacturer can use, dominating smart phone market share.

Attacks of Patent Owners

While busy with inno-vation, the companies are also

at each other’s throat over intellectual property protec-tion. According to a Stanford University analysis, $20 billion has been spent on patent litiga-tion and patent purchases in the past two years, with Apple and Google spending more on patent lawsuits and purchases than on research and develop-ment of new products last year . Because patents on software often grant ownership of concepts, vague algorithms or business methods, some patents are so broad that they allow for ownership of unre-lated products to be claimed. Supporters of the suits usually consider them another strat-egy to defeat and profit from their competitors, at least keeping them from winning.

Revenge of the Old Friend

Though collaboration is common among tech compa-nies, such business relation-ships usually prove to be fickle and tumultuous. When the iPhone was launched, Google integrated their map data and default search option as parts

· 17 · The Consul

of the iPhone experience. This success in the bidding war with Microsoft for being the default iPhone search engine over Bing also helped Google to assert its dominance as revealed in a Sen-ate Antitrust Hearing in 2011 . Between Apple and Google was

a win-win relationship, however, when Google stepped into the mobile handset arena, the stakes changed. Apple’s former CEO Steve Jobs felt that Android was too similar to the iPhone, inciting him to declare that he would go to “thermonuclear war” with Google over it . In the recent iOS6, Apple replaced Google Maps with their own Maps app, causing a lot of frustration to the users, as Apple’s replacement does not meet expectations. In addition, Apple’s new voice-activated personal assistant, Siri, poses another threat to exclude Google from Apple products, serving up answers to people on the go, allowing it to deliver query results directly to those asking for it . While divorcing from Google, Apple contributed the lion’s share ($2.6 billion) to the consortium comprised of Microsoft, Apple, Ericsson, EMC, Sony and RIM, for pur-chasing about 6,000 patents from the bankrupt Nortel, once

a strategic partner of Microsoft. This Apple-Microsoft collabora-tion was called anti-competitive by Google .

A New Hope Last fall, Apple launched iPhone

5 with its iOS6 system, and later the iPad Mini, new iPad4, and new desktops and laptops. In October, Microsoft launched Windows 8, its next-generation desktop platform and a depar-ture from its legacy platforms, and new Surface tablet computer. Three days later, it launched Win-dows Phone 8, aiming at aligning its desktop and mobile platforms. Later in November, Google also released its new Android 4.2, Jelly Bean, after the unveiling of its Nexus 7 tablet in October. The tech industry’s biggest play-ers have shown off their newest software and hardware, all aiming to make big moves before the end of the year. Each company has invested in a new hope for its new products in the new year, hop-ing to win the battle in the next round.

Global Strategy Strikes Back

While most analysis is based predominantly in the U.S., strategies in the global market do make a big difference. Though only the third in smartphone race with iPhones and Android, Win-dows Phone inherits Microsoft’s success in global coverage – its App Marketplace covers over 90% of the world’s population, higher than the other two. Though Google’s Play Store is available in 138 countries and 70% of the world’s population, Microsoft is available in only 115 countries yet 90% of world’s population . This is because Microsoft’s marketplace is avail-

able in China while Google’s is not. If Google could have support for China, they would edge past Apple and get closer to Micro-soft’s potential population reach. Apple also showed its increasing emphasis on global strategy, as CEO Tim Cook said he expects China to overtake the U.S. as Apple’s biggest market in two weeks ago .

Return of the Monopoly?

The word monopoly has been thrown around a lot recent-ly. Microsoft, Apple, and Google – all have been called in that way by media or by each other during lawsuits. However, this term has been used more as an exaggera-tion of the company’s dominant position in one area than a strict economic characterization. Par-ticularly, in recent situations, intense competition has led to the absence of a real monopoly. As Google owns Internet search, Microsoft owns operating sys-tems and applications, and Apple owns high-end hardware and entertainment and media devices, each company has its own advan-tage. In 2012 we’ve seen signifi-cant developments begin to unfold from Microsoft, Google and Apple, and 2013 will be another pivotal year for all the major tech companies, with make-or-break decisions to be made by all. Will there be a return of the monopo-ly? That depends on whether the Force is strong with these compa-nies’ future moves. C

1. http://www.dailyfinance.com/2012/07/28/smartphone-battle-apple-vs-google-vs-microsoft/ 2. http://www.nytimes.com/2012/10/08/technology/patent-wars-among-tech-giants-can-stifle-competition.html?pagewanted=all&_r=0 3. http://thenextweb.com/apple/2011/11/06/how-apple-will-use-siri-maps-and-microsoft-to-divorce-itself-from-google/ 4. http://thenextweb.com/apple/2011/11/06/how-apple-will-use-siri-maps-and-microsoft-to-divorce-itself-from-google/ 5. http://www.economist.com/news/21567361-google-apple-facebook-and-amazon-are-each-others-throats-all-sorts-ways-another-game 6. http://www.zdnet.com/blog/microsoft/google-calls-microsoft-apple-collaboration-on-nortel-patents-anti-competitive/10271 7. http://www.macstories.net/stories/mapping-the-entertainment-ecosystems-of-apple-microsoft-google-amazon/ 8. http://www.3news.co.nz/China-to-become-Apples-biggest-market---CEO/tabid/421/articleID/282911/Default.aspx

Diamonds may be a girl’s best friend, but they are certainly not a wallet’s best friend. An average cost of a diamond engagement ring is $3500, which is nearly 10% of the av-erage US household disposal income according to OECD. Sorry Beyoncé, even if you like it you can’t just put a ring on it. However, diamonds were not always this expensive. In fact, a quick examination of the internation-al diamond supply chain reveals that American consumers are spending far more than they should for a small piece of carbon.

How does a diamond ring find itself at the showrooms of Carti-er, Tiffany & Co., and other retail jew-elry stores? The coveted gemstone’s journey first begins in a diamond mine typically located in Africa. The diamond mined here is rough and contains high percentages of impuri-ties. If the particular diamond has the potential to be cut into a gem quality diamond, then a gem-cutting firm will make preparations to cut and mount it on a ring. Otherwise, the diamond is doomed for industrial use by taking

advantage of its intrinsic value due to its one of the hardest materials on earth.

What is surprising here is the

huge jump in price of the diamond as it moves down the supply chain. Ac-cording to G. Ariovich, a 0.5 carat dia-mond is worth $50 when it’s mined, $100 when it’s sold to rough gem dealers, $125 when sold to gem-cut-ting firms, $250 when sold to whole-sale dealers, and $550 when sold at retail. So when a consumer purchases a diamond ring, the gemstone mount-ed on the ring is worth up to ten times more than the original price. Granted, transporting by dealers and cutting diamonds are necessary processes to produce fine pieces of jewelry, but

Industry & Technology

By Minsoo Kim

· 18 ·

“So when a consumer purchases a diamond ring, the gemstone mounted on the ring is worth up to ten times more than the origi-nal price”

Cut and polished diamonds

A Story of Diamond

· 19 ·

consumers end up paying at least two times as much on average by choosing to purchase from retail as opposed to wholesale.

Moreover, there is an artificial price inflation at each step of the val-ue chain because of the monopolistic market control of the South African diamond distribution company, De Beers. According to Columbia Busi-ness School, De Beers controls any-where between 67 to 80 percent of the diamonds sold in international markets. As such, De Beers purposely restricts the supply of diamonds in order to keep the diamond costs high, thereby increasing its profit margin. Finally, there is the prevalent consum-er psychology that the more expen-sive a product is, the better quality it is, as demonstrated by Kent Monroe and R. Krishnan’s price-perceived

quality conceptualization research. As such, consumers collectively have no real desire to push for a lower priced diamond.

Despite the seemingly solid supply chain and price model, a few variables have the potential to exert a downward pressure on diamond costs. The first variable is the issue of

conflict diamonds. Conflict diamonds, also known as blood diamonds, are diamonds that have been mined from war-prone regions such as Angola and Sierra Leone. These mining operations have funded violent militant groups for years, with some factions raising over $4 billion dollars throughout the last decade. Although conflict diamonds

only account for ten to fifteen percent of the diamond supply, increasing pub-lic awareness has actually catalyzed a

movement to boycott the purchase of diamonds altogether. This movement has the potential to drive down the demand of the product just as the anti-fur campaign dramatically reduced de-mand for fur. The result of this decrease in demand would thus be a decrease in the cost of the diamond. Another vari-able that can lower diamond costs is the global expansion of diamond min-

ing operations, especially in Canada and Russia. The new diamond mines can pose a significant threat to the price model of De Beers, forcing price based competition due to the transition into a more competitive market.

The next time you pass a jewelry store in the mall or walk into a retail boutique to purchase a piece of jewelry for your loved ones, consider the com-plex international trade elements in-volved in defaulting your bank account. You can also choose to take note of the inefficiencies in the market and save a significant amount of money by quitting retail and moving up the supply chain to wholesale. Besides, designing your own jewelry adds a personal touch to your gift. Who knew that a foray into interna-tional trade had practical applications?

C “Consumers end up pay-

ing at least two times as much on average by choosing to purchase from retail as opposed to wholesale”

“A 0.5 carat diamond is worth $50 when it’s mined, $100 when it’s sold to rough gem dealers, $125 when sold to gem-cutting firms, $250 when sold to whole-sale dealers, and $550 when sold at retail”

De Beers Retail Store in Hong Kong

“Sorry Beyoncé, even if you like it you can’t just put a ring on it”

Dear Readers of The Consul, Welcome back from the winter break to our January issue of The Consul. Though we do not have a main regional focus in this issue, our talented team of writers have brought you stories brewing in the background far from the usual conflict-torn centers of attention, including an article on the Scottish independence referendum and India’s infrastructure development. As the release of this issue coincides with ILMUNC XXIX, I would like to take this opportunity to directly address our readers among the thousands of delegates from across the globe attend-ing the conference this weekend. An awareness and interest in international affairs is becoming increasingly crucial in today’s interconnected world – whether it be in business, culture, politics, or simply the responsibilities of being a good global citizen. It is highly encouraging to see internation-al affairs alive in well in so many students, and I sincerely hope that you all will continue to carry that enthusiasm as you go on to college and into your careers. Perhaps I will see some of you here at Penn writing for this very publication next year. But no matter where you decide to go to school – keep your passion for the world alive – it is what sets you apart from a lot of other members of our generation.

Editor-in-ChiefMichael Luo

The International Affairs AssociationUniversity of Pennsylvania